Searching for the next new blockbuster drug treatment

Sunday

Jan 20, 2013 at 6:00 AM

By Lisa Eckelbecker TELEGRAM & GAZETTE STAFF

The newest pharmaceutical company in town controls one of the world's most lucrative drugs, and that's both a blessing and a challenge for AbbVie Inc. and its local research operation, AbbVie Bioresearch Center.

Spun out from Abbott Laboratories as of Jan. 1, the new AbbVie Inc. controls the immune system treatment Humira, a drug that rang up $7.9 billion in sales in 2011 and was developed with the help of Worcester-based scientists.

Humira is poised to remain the biggest money-maker for AbbVie as it plows ahead, free of Abbott. That's partly because AbbVie's employees are seeking to expand the number of diseases that may be treated with Humira, a biological drug that launched in 2003 as a treatment for rheumatoid arthritis and now has regulatory approval as a treatment for a number of other immune system ailments.

Yet a critical patent on Humira expires in a little less than four years, and other drug makers are trying to bring competitive products to market. All of which leaves the new AbbVie and its 21,000 employees worldwide looking for new blockbusters to treat hepatitis C, multiple sclerosis and other maladies.

“At AbbVie what we're really looking to do is bring health care to its highest possible level,” said Dr. Scott Brun, AbbVie's vice president of pharmaceutical development. “We're going to be working on things that can potentially help millions of people.”

AbbVie originated as the pharmaceutical unit of Abbott Laboratories, a company based in Abbott Park, Ill., that also produced medical devices and nutritional products. Abbott acquired its Worcester operations in 2001 when it bought the pharmaceutical assets of German conglomerate BASF AG.

About 700 people work for AbbVie in Worcester, where research focuses on treatments for cancer and the immune system. The company's 440,000-square-foot building in the biotechnology park off Plantation Street also contains a production facility, where workers can produce small quantities of biological drugs.

AbbVie's headquarters is now in North Chicago, Ill. The company's assets would have generated $17.4 billion in revenue in 2011 and are likely to produce $18 billion in revenue this year. AbbVie stock, traded on the New York Stock Exchange, is up about 4 percent after debuting at $34.92 a share.

In addition to its Worcester center and Illinois headquarters, AbbVie operates research sites in Redwood City, Calif.; Germany and China. When asked whether AbbVie planned any changes to its Worcester operations, a company spokesman responded by email, saying no significant additional restructuring was envisioned.

Analysts differ on the company's outlook.

Investment banking firm Jefferies named AbbVie its top stock pick among U.S. pharmaceutical developers and issued a “buy” recommendation on the shares. Jefferies analysts wrote in a Jan. 15 note: “We see the potential transformation of the company from a slower growing dividend play into one of the most exciting pipeline stories in the industry.”

Some are less bullish.

Morningstar analyst Damien Conover wrote, “Similar to other drug companies, AbbVie faces the risks of new product failures, reimbursement challenges for new drugs, and drug pricing cuts by large payer groups that are growing increasingly price-sensitive. Further, AbbVie's high concentration of Humira sales makes the company very exposed to any new competitive threats to Humira.”

Analysts from investment bank UBS kicked off coverage of the company with a “neutral” rating on the stock, noting the strength of the company's products but also expressing concerns about competition, a lag until newer products in the pipeline kick in and uncertainty about how big the hepatitis C business could be.

AbbVie officials have said they have a plan for a balanced and sustainable pipeline of products. The company is studying Humira's use as a potential treatment for skin and eye diseases, as well as arthritis of the spine. Jefferies projects global revenues for Humira could rise to $14.67 billion in 2017.

A potential treatment for the hepatitis C virus, which can cause liver damage, also is under study.

“What we have is a combination of three drugs that hit the virus at different points in its replicative cycle,” Dr. Brun said. “With this treatment, we're essentially able to convert HCV (the hepatitis C virus) to a disease that can be effectively treated with a 12-week regimen, entirely oral, with cure rates above 90 percent.”

UBS analysts project the treatment could bring in $600 million in U.S. revenue by 2020.

Another biological drug called Daclizumab, under development with Weston-based Biogen Idec as a treatment for multiple sclerosis, is in the third and final phase of human studies. Scientists at AbbVie in Worcester are supporting that research, said James Sullivan, AbbVie's vice president of pharmaceutical discovery.

Abbott officials said the Worcester site continues to innovate and display a spirit they want to see across the company. They also noted Worcester won't be the only place they'll be seeking advances.

“We feel it's really important that we are able to access talent and innovation on a global scale,” Mr. Sullivan said. “Obviously, Massachusetts and Worcester are important, but there's also exciting science going on across the globe, and we feel it's important to have research there.”